Efficient oversight and supervision of capital market infrastructures: NBU and NSSMС agreed on cooperation

On July 1, 2020, the National Bank of Ukraine and the National Securities and Stock Market Commission of Ukraine have signed Memorandum of Understanding on Сooperation in the Sphere of Oversight and Supervision of Capital Market Infrastructures in Ukraine.

The purpose of this document is to strengthen and enhance cooperation between financial regulators in the field of effective oversight and supervision of capital market infrastructures in order to reduce systemic risks in their activities. This will provide market participants with additional confidence in their overall financial stability, sustainability and reliability.

In particular, the Memorandum will create a basis for the National Bank of Ukraine to implement the oversight of the key capital market infrastructures (i.e. securities settlement systems, activities of the Central Securities Depository, central counterparties and trade repositories) and further conduct a comprehensive assessment of their compliance with the international standards PFMI “Principles for Financial Market Infrastructures” (PFMIpublished by the Bank for International Settlements and the International Organization of Securities Commissions.

The task mission of the National Bank of Ukraine on the oversight for capital market infrastructures is to contribute to the prevention and reduction of macro risks of liquidity, credit, operational and other risks of the financial market, as well as threats to the overall financial stability.

The assessment of capital market infrastructures for the PFMI compliance will be carried out by the National Bank of Ukraine together with the NSSMC. Based on these international standards, financial regulators will also jointly develop risk management recommendations for capital market infrastructures.

According to the Memorandum, the National Bank and the NSSMC will establish effective cooperation, sharing of information and experience, joint coordination of efforts on the following issues:

• on risk assessment of capital market infrastructures;
• of significant changes in capital market infrastructure information systems;
• on compliance with national and international standards, in particular the PFMI;
• on improving cooperation and coordination between regulators and authorities.

Moreover, financial regulators will jointly work on amendments to the legislation in order to consolidate the powers of the National Bank of Ukraine on the oversight of key capital market infrastructures.

For reference

Just to remind you that the Memorandum of Understanding on Cooperation in the Development of Capital Markets Infrastructure in Ukraine between the National Bank of Ukraine and the NSSMC is already in force. Signed in 2017, the document consolidated the objectives of the financial sector reform strategy in terms of capital market infrastructure transformation, principles of functioning of such infrastructure and its separate elements, and outlined the steps necessary for its reform. It provides, as well as the new memorandum, implementation of PFMI international standards in the Ukrainian legal field and assessment of compliance of capital market infrastructures with them.